CIT Tells Commerce to Appeal EBCP Issue or Risk Facing Stricter Ruling in Opinion on CVD Case

The Court of International Trade told the Commerce Department in a May 12 opinion that if it doesn't appeal its position on China's Export Buyer's Credit Program, it must explain why the court should not provide some sort of "equitable relief" including an injunction on the continued imposition of countervailing duties on the program. Judge Jane Restani also remanded Commerce's positions relating to its land value and ocean freight benchmarks while upholding the agency's specificity finding for the subsidization of energy in China.

The case concerns the 2017 administrative review of the CVD order on crystalline silicon photovoltaic cells from China. In the review, as it has done many times, Commerce hit the respondents with adverse facts available over the Chinese government's failure to provide information about the EBCP so that it could verify that the respondents' U.S. customers did not use the program -- a position the trade court has repeatedly struck down as unsustainable but that the agency has yet to appeal. The plaintiffs, led by Risen Energy Co., contested Commerce's use of AFA in considering the EBCP. This led to Commerce requesting a voluntary remand in the case to reconsider this position.

In the opinion, Restani granted the request, but with a twist. Declaring the situation "untenable and inequitable," the judge gave Commerce specific orders. "If the Government decides to remove the EBCP from its subsidy calculation under protest but does not intend to appeal, it must explain on remand why the Court should not provide some form of equitable relief, such as the immediate return of deposits, or an injunction of the continued inclusion of the program with no attempt at verification that results in the temporary collection of funds that ultimately are not owed," the judge said.

The plaintiffs also challenged Commerce's decision to use a tier-3 benchmark to calculate the value of land-use rights, comparing whether the government price is in line with market principles. The agency used a 2010 report on Thai land-use rights to look at the market principles. The exporters told the trade court that Commerce erred by rejecting tier 2 and 3 benchmark data from Mexico and Brazil and by rejecting a supplemental 2018 Nexus Report submission as a tier-3 benchmark.

Restani then remanded the issue back to Commerce for further consideration. While ruling that there was not enough evidence to reject the use of the Nexus Report, the judge also pointed to several reasons why Commerce may not be allowed to continue using the 2010 Thai data. For one, the data is stale as there is more contemporary data available. For another, Thailand and China have diverged since 2010 in terms of income levels and population density, calling into question whether the Thai data can still be used as a proper surrogate. On remand, Commerce must further explain its reliance on geographic proximity in the land benchmark analysis and whether Thailand remains a valid surrogate for the value of Chinese land.

Risen and the other plaintiffs also contested Commerce's ocean freight benchmark, arguing against its use of Descartes data and in using a simple average between that data and Xeneta data. Siding with the plaintiffs, Restani agreed that there are flaws in the Descartes data in that it reflected only carrier prices from the U.S. to China as opposed to the Xeneta data's "wider breadth." The plaintiffs also said that the Descates data did not reflect what the plaintiffs would reasonably pay for imported glass, aluminum and polysilicon and it failed to account for "market conditions, the container load, and inland transportation."

"Thus, the court remands to Commerce to reconsider the flaws raised by Plaintiffs," the judge said. "The court acknowledges that in some contexts, such data might result in a reasonable determination of the world market price. Here, however, Commerce should also consider the language and purpose of the controlling regulation to decide whether it is necessary to use the Descartes data to arrive at a 'world market price' and discuss the identified flaws in the data. Presently, the analysis does not consider these flaws and whether the resulting Descartes data reasonably 'reflect[s] the price a firm actually paid or would pay if it imported the product.'"

Lastly, the judge addressed the plaintiffs' challenge over the specificity finding of China's subsidization of electricity. The exporters challenged Commerce's reliance on AFA to find that the National Development and Reform Commission (NDRC) is a central price-setting authority, failure to designate a subsidized geographic region, and reliance on unreasonably high benchmark rates for electricity.

Restani sided with Commerce across the board, finding that the agency appropriately used AFA since the Chinese government failed to provide the requested information to evaluate the cooperation between Chinese provinces and the NDRC for price adjustments. On the failure to identify a specific subsidized region, the judge said this issue has already been raised and rejected before the court and that "Commerce was not required to identify a particular subsidized region." As for the benchmark calculations, this issue was also already raised and rejected, with CIT and the U.S. Court of Appeals for the Federal Circuit finding that the calculation methodology was reasonable.

(Risen Energy Co. v. United States, Slip Op. 22-44, CIT Consol. #20-03912, dated 05/12/22, Judge Jane Restani. Attorneys: Gregory Menegaz of deKieffer & Horgan for plaintiffs; Sarah Wyss of Mowry & Grimson for consolidated plaintiffs; Craig Lewis of Hogan Lovells for plaintiff-intervenor Shanghai BYD Co.; Jonathan Freed of Trade Pacific for plaintiff-intervenor Trina Solar Co.; Ann Motto for defendant U.S. government)